North American auto dealers – like many other industry teams – are facing increased risk related to cyberattacks. Dealing with a cyber event is stressful and chaotic. Despite having the proper defenses and protocols in place, experiencing an actual intrusion will put the entire organization to the test. While working around the clock to restore systems, recover files, and cooperate with authorities, there are certain important steps involving insurance that organizations should not overlook.To move toward a state of financial recovery, organizations must maintain contemporaneous documentation, engage with their insurance carrier(s), and maintain consistent communication with stakeholders. It’s important to quickly identify contentious issues related valuation or coverage to adequately prepare. Leadership should set expectations internally and establish a communication protocol to streamline documentation and information flow.
Navigating a Cyber Insurance Claim
- Compile claim related expenses such as incident response and system restoration costs and present them to insurer for reimbursement.
- Capture incremental costs to the business as a result of operating during the recovery of the cyber incident.
- Measure lost business income/lost profits through the evaluation of market conditions, historical financial records, and customer sales trends.
- Submit the claim and facilitate discussions with the adjustment team through final claim resolution.
- Draft proofs of loss and narratives required by claims adjusters.
- Develop the narrative to explain how the cyber incident impacted operations, which often includes multiple locations and an impact to communication throughout the organization. In cyber losses, the story is critical in helping the adjustment team understand the scope of the loss and how the organization has been impacted.
Specific Areas of Loss Relevant to Auto Dealerships
- Establishing a true lost sale rather than a deferred sale
- Measuring the ancillary revenue loss including parts, service, warranty repairs, financing, etc.
- Calculating the incremental expenses associated with manual processes
- Understanding the ordinary payroll provision of the insurance policy to ensure retention of the workforce
- Integrating seasonality and special programs into the financial model
Timely submission of a supportable claim often accelerates the indemnification process.